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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: unclewest who wrote (6760)	9/21/1999 12:35:00 PM
From: FLSTF97	Read Replies (1) \| Respond to of 54805

1.) dataquest has projected the dram market as $63 billion in 2002, i have to ask where does the $50 billion in 2003 come from? My DQ came from a presentation in March so it is admittedly dated. At that time they projected about $44 billion in 2002 and I applied the 10% CAGR to that number to get the $50 bil. 2.) math is off slightly. using your numbers i get $450 million.that is $18 per share. Yep goofed, I had originally assumed a net operating profit ratio equal to the current GM but typed 75% instead of 72.8%. 3.) i question the pe of 10. show me one company anywhere that has $18 per share in earnings with a pe of 10. especially after growing the earnings from $.25 to $18.00 in three years. Discounting human nature and putting more value on efficient market theory than reality dictates, I would suggest that the past performance is not always a good harbinger of the future (Gillette, Motorola come to mind during the recent past). Further I would suggest that PE based pricing is a forward looking assessment of value.If your expectation is that the earnings would drop in the following 3 years from $18 to $1 I for one would not be willing to pay 10x earnings for a share. As detailed on the RMBS thread, I would suggest that if the earnings growth would be constrained to that projected for DRAM CAGR of around 10%, then this should be valued similar to a bond or utility stock. 4.) combining your #'s with dataquests dram forecast i calculate almost $23 in earnings. Ok I'll buy that number. So what would you pay for a security that currently yields $23 a share, has a 10% growth rate, and limited downside risk?